FOREIGN flows to China’s yuan government bond market could balloon to US$400 billion annually, an analysis from the Institute of International Finance (IIF) showed Tuesday. Central banks were behind 60 percent of the flows to Chinese government bonds in the first quarter of 2021 as allocation of reserves to Chinese bonds continued to increase, the data showed. While flows to Chinese bonds have continued to rise as the country opens up to foreign investors and its bonds are included in major indexes, “they remain small relative to China’s gross domestic product and share of global trade,” said the IIF report. It estimated that if global yuan reserves rose from 1.8 percent to 3 percent of China’s gross domestic product over the next 10 years, “annual flows to the local bond market would consistently exceed US$400 billion.” Separate data from the IIF showed that for last year a net US$47.3 billion from foreign portfolios made its way into Chinese stocks, while US$198.3 billion was attracted by a variety of debt instruments. In the first quarter of this year, net foreign inflows to Chinese stocks and debt totaled US$83.1 billion. (SD-Agencies) | 